Announcement

Collapse
No announcement yet.

The Sequester

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Historical Inflation Rate | InflationData.com
    To be Truly ignorant, Man requires an Education - Plato

    Comment


    • Depressing

      The Inflation Calculator
      To be Truly ignorant, Man requires an Education - Plato

      Comment


      • snapper,

        burst of the housing bubble in 2008 was caused by lack of demand
        no-- the burst of the housing bubble caused the lack of demand, or was at least one major reason (the others being the international financial crisis as well as credit overhang), not the other way around.

        And in 1920 the Fed caused the crash by bringing inflation down too quickly???
        it was the straw that broke the camel's back. there was a variety of factors, biggest of which was a huge influx of veterans returning from the war. this led to declining wages and prices, but the Fed was still trying to deal with war inflation-- and dealt with it too quickly, almost doubling interest rates in six months' time.

        the fed took deflationary actions during a deflationary environment-- end result was major deflation, leading to the recession.
        Last edited by astralis; 19 Mar 13,, 18:17.
        There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

        Comment


        • So what caused the housing bubble to burst - and the international financial crisis? You see to me you have this the wrong way around... I struggle to understand your view.

          Comment


          • But the graph you guys are using that looks flatter is just showing percent change from the previous month, and except for the one trough, it's all positive. Inflation is going steadily up and you know it.

            -dale

            Comment


            • snapper,

              So what caused the housing bubble to burst - and the international financial crisis? You see to me you have this the wrong way around... I struggle to understand your view.
              you're confusing the events that caused the Great Recession with factors that have prolonged the recession.

              the housing bubble burst because of an uptick in home foreclosure rates. this in turn began a wave of panic that forced multiple subprime lenders into bankruptcy.

              this, in turn, affected investment banks with holdings in mortgage-backed securities. this then led to further repercussions that affected home prices in the non-subprime category.

              the financial field was already undergoing issues of its own prior to this, but the collapse of lehman brothers as a part of the housing bubble crisis led to a full-blown international financial crisis. this in turn led to an unprecedented tightening of credit/liquidity in the private market, leading to a collapse in aggregate demand.

              it's this continued collapse which has prolonged the Great Recession, even as its original causes have largely been solved or ameliorated.
              There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

              Comment


              • dale,

                But the graph you guys are using that looks flatter is just showing percent change from the previous month, and except for the one trough, it's all positive. Inflation is going steadily up and you know it.
                i'm not sure what your point is. in the long-run, there will be inflation as economic activity and money supply increases.

                NOT having long-term inflation means your economy is not growing or even shrinking.

                the ideal situation is one where there is steady, low-level inflation, just as for a developed economy GDP growth should be steady, and relatively low.

                currently inflation is at a very low rate. given that we're supposed to be economically recovering, it should be higher than it is today, at least in line with historical averages.

                the fact that it isn't, shows that all the people whom fear hyperinflation is just around the corner as a result of Fed actions/stimulus have badly misplaced fears.
                Last edited by astralis; 19 Mar 13,, 19:36.
                There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                Comment


                • Originally posted by astralis View Post
                  snapper,



                  you're confusing the events that caused the Great Recession with factors that have prolonged the recession.

                  the housing bubble burst because of an uptick in home foreclosure rates. this in turn began a wave of panic that forced multiple subprime lenders into bankruptcy.

                  this, in turn, affected investment banks with holdings in mortgage-backed securities. this then led to further repercussions that affected home prices in the non-subprime category.

                  the financial field was already undergoing issues of its own prior to this, but the collapse of lehman brothers as a part of the housing bubble crisis led to a full-blown international financial crisis. this in turn led to an unprecedented tightening of credit/liquidity in the private market, leading to a collapse in aggregate demand.

                  it's this continued collapse which has prolonged the Great Recession, even as its original causes have largely been solved or ameliorated.
                  Ok now you're making more sense. So the burst of the housing bubble was related to the financial crisis yes? It 'added to it' can we say? In this why did the foreclosure rate rise? My argument, as you probably know, is because the Fed raised interest rates was it 6 times in early 2008? I can't see the difference between this and what you accept the Feds actions did in the 1920s when they acted too quickly against inflation. More importantly I don't see your explanation of why the 1920s crash was so brief. Could you give me your account of this please? - when you have time.

                  Comment


                  • Originally posted by astralis View Post
                    dale,



                    i'm not sure what your point is. in the long-run, there will be inflation as economic activity and money supply increases.

                    NOT having long-term inflation means your economy is not growing or even shrinking.

                    the ideal situation is one where there is steady, low-level inflation, just as for a developed economy GDP growth should be steady, and relatively low.

                    currently inflation is at a very low rate. given that we're supposed to be economically recovering, it should be higher than it is today, at least in line with historical averages.

                    the fact that it isn't, shows that all the people whom fear hyperinflation is just around the corner as a result of Fed actions/stimulus have badly misplaced fears.
                    I call $3.90 for a gallon of regular unleaded hyperinflation these days.

                    -dale

                    Comment


                    • snapper,

                      In this why did the foreclosure rate rise? My argument, as you probably know, is because the Fed raised interest rates was it 6 times in early 2008?
                      housing bubble had already peaked by late 2006-early 2007. the financial crisis was already in full swing by 2007.

                      I can't see the difference between this and what you accept the Feds actions did in the 1920s when they acted too quickly against inflation.
                      Fed action in 2007-8 were emergency measures to increase liquidity, which did little in comparison to the complete collapse of aggregate demand and wealth (holdings in the stock market fell from $20 trillion to $12 trillion-- nothing the Fed could do was going to offset -that-). it was a small amount of inflationary pressure against a hugely deflationary environment.

                      OTOH, when you do a deflationary measure in a deflationary environment the effect is not drowned, but is instead amplified.

                      More importantly I don't see your explanation of why the 1920s crash was so brief. Could you give me your account of this please?
                      the immediate injection of millions of war veterans caused significant short-term deflation. but it only happened once, and as the economy adjusted to millions of new workers the medium-term environment became inflationary. this, coupled with looser Fed policy, led to a dramatic expansion of monetary supply in 1922-1925-- the real start of the "Roaring Twenties".

                      this is a different situation from today. if you look at the historical record of recessions/depressions as a result of inflation-fighting, you'll see the aftermath is significantly different from the recessions/depressions that result because of lack of aggregate demand.

                      as krugman notes, "it's much harder to push private spending higher than to stop holding it down."
                      There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                      Comment


                      • Originally posted by astralis View Post
                        housing bubble had already peaked by late 2006-early 2007. the financial crisis was already in full swing by 2007.
                        So there were two bubbles bursting at the same time and they weren't related?

                        Originally posted by astralis View Post
                        Fed action in 2007-8 were emergency measures to increase liquidity, which did little in comparison to the complete collapse of aggregate demand and wealth (holdings in the stock market fell from $20 trillion to $12 trillion-- nothing the Fed could do was going to offset -that-). it was a small amount of inflationary pressure against a hugely deflationary environment.
                        Hmm wasn't that a bit like trying to shut the stable door after the horse has bolted? More importantly if this was an attempt to increase liquidity what were rises in interest rates from 2004-6? Presumably attempts to reduce liquidity - and that of course is part of my point. By raising rates the Fed directly contributed to bursting of the bubble it had created by flooring rates after the dotcom bubble burst.

                        Originally posted by astralis View Post
                        OTOH, when you do a deflationary measure in a deflationary environment the effect is not drowned, but is instead amplified.
                        On this I think we can agree but my point is that no 'measures' should be taken.

                        Originally posted by astralis View Post
                        the immediate injection of millions of war veterans caused significant short-term deflation. but it only happened once, and as the economy adjusted to millions of new workers the medium-term environment became inflationary. this, coupled with looser Fed policy, led to a dramatic expansion of monetary supply in 1922-1925-- the real start of the "Roaring Twenties".
                        So if I get this right... and please correct me if this not what you mean - returning veterans, who presumably didn't have jobs, found jobs without some massive Government programme? I mean was there some 'stimulus package'? It must have been remarkably effective. So they chaps came home and interest rates were high to fight inflation and yet they found jobs etc? How can that be?

                        Originally posted by astralis View Post
                        this is a different situation from today. if you look at the historical record of recessions/depressions as a result of inflation-fighting, you'll see the aftermath is significantly different from the recessions/depressions that result because of lack of aggregate demand.
                        So right now some inflation would be good right? It would help boost aggregate demand? Is this correct?

                        Originally posted by astralis View Post
                        as krugman notes, "it's much harder to push private spending higher than to stop holding it down."
                        Yea... but a false scare of alien invasion would also boost demand right? If you have any contact with the Nobel Laureate please ask him to help feed the needy in New York to the tune of $105,000 (of which $250 is mine) by debating Robert Murphy on the business cycle. He's been dodging a debate since 2011; Robert Murphy vs Paul Krugman Debate - Austrian Economics vs Keynesian Theory - Food Bank NYC Charity Benefit

                        Comment


                        • sry
                          Last edited by snapper; 20 Mar 13,, 01:14.

                          Comment


                          • Originally posted by dalem View Post
                            Hmm. But I see

                            http://research.stlouisfed.org/fred2/graph/?s[1][id]=CPIAUCSL

                            (can't get the pic to load for some reason).

                            I see inflation.

                            -dale
                            dalem,
                            The Consumer Price Index is an index.
                            Inflation is the change in the index.
                            The most common measure of inflation is the percent change year-on-year.

                            The difference between the two graphs is read on the left side, vertically.


                            ADD: Since 1980, when unleaded gas was $1.25 a gallon, gas prices have increased one percentage point faster than overall consumer prices.

                            If the two rates of inflation were the same, that $3.90 gallon would now cost $3.20.
                            Last edited by DOR; 20 Mar 13,, 03:16.
                            Trust me?
                            I'm an economist!

                            Comment


                            • Originally posted by snapper View Post
                              By 1980 method of calculation inflation it is just below 10%. See Alternate Inflation Charts

                              Why do we never hear of the Great Depression of the 1920s?
                              The 1980 method of calculation includes rotary dial telephones, coal fired trains, plaid bell-bottom double-knit suits and vinyl records.

                              It’s what economists call ‘retro.’
                              Trust me?
                              I'm an economist!

                              Comment


                              • snapper,

                                So there were two bubbles bursting at the same time and they weren't related?
                                i already gave an explanation above. of course they're related, and both were in full swing by the time the Fed took any action.

                                More importantly if this was an attempt to increase liquidity what were rises in interest rates from 2004-6? Presumably attempts to reduce liquidity - and that of course is part of my point. By raising rates the Fed directly contributed to bursting of the bubble it had created by flooring rates after the dotcom bubble burst.
                                the bubble was NOT created by the Fed. much of the hot money came from unprecedented chinese/international monies flowing into the system. the 2000-2004 period was a global inflationary period, as the international economy grew faster during this period than it ever did in world history.

                                So if I get this right... and please correct me if this not what you mean - returning veterans, who presumably didn't have jobs, found jobs without some massive Government programme? I mean was there some 'stimulus package'? It must have been remarkably effective. So they chaps came home and interest rates were high to fight inflation and yet they found jobs etc? How can that be?
                                i'm surprised you don't know.

                                there WAS a huge stimulus-- it was called World War 1. the War spurred a huge development of american industry-- munitions, automative, and ship-building, much of this funded by the UK and to a lesser extent, france.

                                in any case, trying to compare Industrial-age employment to the current information-age employment is foolish. far easier to employ huge numbers of unskilled/semi-skilled workers in the former.

                                So right now some inflation would be good right? It would help boost aggregate demand? Is this correct?
                                in the specific scenario of a liquidity trap, a slightly higher inflation rate would indeed be a good thing. note the qualifiers.
                                There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

                                Comment

                                Working...
                                X